Wednesday, June 14, 2006

IIMs vs ISB - Who's Your Daddy?

I came across a thread on Pagalguy today. It was a heated debate over the IIMs vs ISB with people getting all heated up and making a lot of personal attacks without giving concrete facts and figures.

It was a sermon lasting many, many pages and I got bored by the time I finished Pg 1. So I decided I'l just shut it.

While I had decided, I should stay away from this debate since I am neither a part of IIMs nor of ISB(and there are enough IIMers who are crying themselves hoarse over why they deserve their top dollar salaries and enough PR by the ISB machinery too to say they have arrived), still, old habits die hard :-)... So here goes my two bits worth...

I believe theres no need nor any ground for comparison. Both are fundamentally different schools which cater to different domains, different target audiences, different cultures. Its like saying: "Hey, who is better? Australia or Brazil?" The point to note is, Australia are the world champions in Cricket and Brazil in Football. This debate, in my opinion, is similar to that simple question.

Point 1 - Target AudienceThe primary target audience for the IIMs are graduate students fresh out of college. Whilst they have certain part time executive programs and another coming up for people with more than 7 years experience, their flagship PGP programme still primarily comprises of people with less than 1 year of work experience. In the current batch, it is 63%. Also the mix comprises primarily of engineers with the current batch having 70%+ participation from people with an engineering/technology background. For those who wish to cross-check, here is where you go.

For ISB, it is people with atleast 2 years of work experience, if not more. They also come from varied spheres. They come with experiences, both in terms of work and life, and their contribution to a class room will understandably be different from what it would probably be at an IIM ( I don't have the link for the ISB student profiles with me at the moment.)

Point 2 - Course DurationAn IIM PGP programme is of 2 year duration, which comprises of compulsory subjects(in the first year if my research is right - Mayank and Shipra, feel free to correct me.) and electives in a trimester format. An ISB course is of 1 year and is comprised of 8 semesters. 4 semesters for the core curriculum and 4 for electives, with each semester being of 5-6 weeks in duration. This point is pertinent for a couple of reasons.

One: At ISB, you have to be sure of yourself and very confident that you will be able to absorb the course curriculum, since the pace is going to be very hectic. It is a course for someone who knows what s/he wants exactly and is willing to go after it in the shortest span of time. At an IIM, there is still the opportunity to go back and do course corrections.

Two: The opportunity cost involved (i.e the salary you are losing since you are joining a B-School and also the increments you are losing out on.) For an IIM, it is around INR 200,000 avg. whilst for ISB, it is around INR 450,000 avg. That is to be expected since ISBians are people with work experience compared to more percentage of freshers at IIMs which will take the average down.

An ISB degree costs INR 1,300,000 (tuition) + INR 115,000 to INR 175,000 for apartment + living expenses + Laptop Cost(since it is compulsory) The average salary on graduation is INR 1,000,000. While this figure is higher than the IIMs, it must be borne in mind that this is given to people who already have work experience.

An ISB degree thus works out to be a very expensive degree, and students will definately consider the Return On Investment for an ISB degree vis a vis the IIM degree. In short, only the people who have saved enough or are rich enough will be able to afford an ISB education and it certainly isn't one the majority of the population can afford. In contrast, an IIM degree is much, much cheaper and also has a good return on investment

Point 4 - FacultyThe IIMs comprise primarily of Indian faculty drawn from the best talent pool and having people holding doctrates from institutes like MIT.The ISB comprises of visiting faculty that is drawn from US and European B-Schools like London Business School, Wharton, Kellogg, Stanford, Chicago, Duke, and Texas throughout the year along with Indians. For a subject within a semester, one professor takes one half, while the other professor completes the course.

Point 5 - CultureIn India, an MBA is considered a done and dusted post-graduate degree, to be gone through as a ritual in the quest for the elusive top paying job, a way out of the present job, to acquire functional skills, to acquire the right "qualifications" to get a promotion over a colleague amongst other reasons. We seldom stop to think: "What are the skill sets I wish to develop? Do I need an MBA to assist me in the roadmap I have charted out for myself? Which school should I choose? Does it suit my purposes? Do companies in the sector I wish to work in, come to this school? What are their intakes? What kind of profiles do they look for? How much experience would qualify me for a lateral placement?" It's usually: "IIM - Barclays paid USD185,000" or "ISB - INR 1 crore school..."

How many applicants visit schools to study their profiles, talk to the alums, get a feel of the campus before deciding? I recently spoke to Raghu (IIM-L) and he said, the IIMs arent known for this. ISB has a visit programme and once you evince interest and send them your information, they will help you to get in touch with an alum for guidance.

That is the difference in culture I am talking about. The ISB is modelled on US B-Schools, where an MBA has evolved from a purely academic degree to a vocational course to something that is today, somewhere between the two(this line is credited to Vatsa - but I swear I jotted it down from what I remembered.)

Point 6 - The Qualification ProcessFor an IIM, the CAT is the be all and end all. It is the filtering process used to weed out potential applicants and keep the best of the lot for further weeding out through GDs and PIs. At ISB, the GMAT scores are taken as one of the parts of the applicant's candidature submission. There is weightage given to work experience, the industry, the gender, diversity of work and personal experiences, submission essays, recommendations.

Point 7 - Marriage Prospects :-)For years, I have been hearing "That brilliant boy with an IIT-IIM pedigree" line. Guess, now I can start hearing about "That brilliant boy with a BITS-ISB pedigree" line. Its my (flawed???) research that more BITSians goto ISB.

A lot can be debated over this issue by people far more wiser, more qualified and more adept than me in all ways. But there's no substitute for common sense and common sense says: "Jeeyo aur jeene do..."

But, I would like to differ on the line.."Who have saved enough or rich enough...". ISB facilitates student loans for financially struggling students.(no hassles as ISB has tie-ups with few banks). Also, the number of scholarships are increasing every year...I am not denying the fact that ISB is expensive, but the 'affordability' is 'perceptive'..If one has the confidence in himself/herself to land in a good job, then nothing should stop him/her from applying to ISB (by taking loans)

In the ROI..you should include opportunity cost (the one year Post-MBA salary of ISB over IIM). The equation changes significantly.

@bharani: i did some number crunching as per the rates quoted on the isb site for an assumed loan amt of 10 lakh and the payment is a figure ranging from 13-14 lakh for it.

i am not questioning the cost of the isb education per say, but for people, say with 1-2 years experience coming from a middle class background, it SEEMS a better bet to just aim at cat (having the confidence that they can get through) because of the low charges... so that again contradicts the principles of going to the school with the best fit and ultimately leads to the detriment of all parties...

@giks: sorry for missing u out in the 1st comment :) was commenting and saw urs later...

regarding your point, i wuld like to mildly differ with you in that i think, it is still awhile to go before the isb reaches the level of the iims in terms of pedigree... its not because of the quality, its just that isb being a newer school is still in the stages of finding its feet, whereas the iims have been around for ages... and remember, the isb is positioning itself as a global bschool in the domain of the harvards, whartons et al.... that chasm is still wider...

hi naveen, great post...covers almost all the aspects...but i would like to differ on one of the issues mentioned. am a current ISB student - i will try to be as objective as possible about this.

assume someone with about 3-5 years of workex. further assume this person has a salary package of about Rs. 4.5 lakhs/annum.

now lets look at the cost of going to an IIM.fees/expenses for 2 years = Rs. 5 lakhsopportunity cost of salary foregone = Rs. 9 lakhs (Rs. 4.5 lakhs/year)

therefore total cost = Rs. 14 lakhs.

now, lets look at ISBfees/expenses for 1 year = Rs. 15 lakhsopportunity cost of salary forgone = Rs. 4.5 lakhsthe person graduates one year earlier hence, you subtract that from the total cost when compared to an IIM. lets assume this person gets a salary of about Rs. 8 lakhs (conservative considering that avg outgoing salary last year at ISB was Rs. 11.77 lakhs ; still, lets go with it when you consider large outliers, etc)

so, from the perspective of cost & ROI , ISB still works out to be a better option. please note that i'm commenting only on the cost part - not on the other aspects that you have covered. also, this is in no way a comparison between ISB & the IIMs. It is just a statement of facts.

@Swapnil: as u said and as i have said in my blog as well, one need not compare the ISB and the IIMs... they both r mutually exclusive sets (atleast in my opinion) catering to a different target audience with very little overlap...

apropos ur comments about the cost factor, i find it incredibly believable the points which u have put across... they r valid and i think i stand corrected when i say that:

"An ISB degree thus works out to be a very expensive degree, and students will definately consider the Return On Investment for an ISB degree vis a vis the IIM degree. In short, only the people who have saved enough or are rich enough will be able to afford an ISB education and it certainly isn't one the majority of the population can afford. In contrast, an IIM degree is much, much cheaper and also has a good return on investment"

i think i should rephrase it partially to say:

"the isb offers a very viable option for people with a certain amount of work-ex to complete their MBA in a time span of 1 year at a very competitive cost comparison with the IIMS"

now why i specifically mention the work-ex part is because i find one anomaly in ur observations...

point 1:

u have calculated the ROI for a person with 3-5 years of workex...

if u see any profile note of the iims, u will observe that the maximum number of students are with less than 2 years of work ex... whereas the isb will have very few people with this profile...

iim a class of 2007 has 63% of its students with 0-2 years work ex; only 7% of its students fit into the 3-5 years work-ex bracket... u can check it here (http://www.iimahd.ernet.in/recruitment/recruitment_student.htm#01)

iim b class of 2006 had 61% freshers (0 workex) in its batch according to one of the leading papers(sorry i forgot which... but it is a reliable source)

iim c class of 2006 has a whopping 84% students within the 0-2 years workex bracket(0 months - 57%, <1 yr - 7%, <2yrs - 20%)... that can be seen here(http://www.iimcal.ac.in/corporates/fp_profile.asp) again, only 7% fall into the above 3 years category...

i have read in reliable publications that the percentage of freshers (0 workex) at iim L and K is slightly lower at around 25%... inspite of that we can consider that the figures will be high enough to fit into this discussion

a person with a workex of around 2 years might make around 3 lakhs pa on avg...a person with workex of around 1 yr mite make around 2.2 lakhs on avg...

now, considering a hypothetical situation wherein we have the 60% 0-2 years workex comprising of 45% with 0 workex, 8% with 1 year workex and 7% with 2 years workex... we can arrive at an avg sal by weighted avg..

at the time of admission, most people would be taking loans for the tuition fees and living...

in that case, the loan amt for an iim would be Rs. 5 lakh while for isb it would be around 10-15 lakhs depending on the savings etc...

one imp thing to note is that the isb calculation places a heavy weightage on the salary after graduation, which is 1 year before an iim grad gets out... but loans will be taken at the start of the process which nullifies that advantage in my opinion...

one more thing i wuld like to make a note of is that ,as u have rightly said, the avg salary for the last batch of isb was 11.77 lakhs. for iims, it has gone upto around 8 lakhs.

i think, ur point with calculations for ppl with 3-5 yrs workex is very valid and we must appreciate that the isb offers a very takable admission offer for such a demographic... i am willing to concede on that pt...

however, also looking at the demographic that i have mentioned in this reply, one must still believe that the iims a much more profitable option(atleast cost wise, if nothing else) to the majority of the junta in this country...

which brings us back to the question: which came first, the chicken or the egg? (ie. iims vs isb) :-)

agree on most of your points naveen... i was saying that for people in the 3-5 yr workex bracket, ISB turns out to be more cost competitive. For freshers, or people with 0-2 yrs of work ex, the IIMs definitely works out to be a cheaper option. Again, the IIMs and ISB are avery different in many aspects, all of which have been discussed in detail!-Swapnil